Highlights: UK ministers quit over draft Brexit deal, pound and bank stocks tumble

Highlights: UK ministers quit over draft Brexit deal, pound and bank stocks tumble

LONDON (Reuters) - Prime Minister Theresa May battled on Thursday to save a draft divorce deal with the European Union after her Brexit secretary and other ministers quit in protest at an agreement they say will trap Britain in the bloc's orbit for years.

THURSDAY'S RESIGNATIONS

Dominic Raab: Brexit minister

Esther McVey: Work and Pensions Secretary

Shailesh Vara: junior Northern Ireland minister

Suella Braverman: junior Brexit minister

Senior Eurosceptic lawmaker Jacob Rees-Mogg is to submit a letter of no confidence in Prime Minister Theresa May later on Thursday, The Daily Telegraph's chief political correspondent said on Twitter, citing unnamed sources.

FINANCIAL MARKETS

British financial regulators held a conference call with major banks seeking feedback on market conditions after the pound and financial stocks sank following Raab's resignation, sources said. One source said the call was a direct request from Bank of England Governor Mark Carney. The central bank declined to comment.

Britain's financial services greeted the news of the draft agreement with weariness and worry, citing multiple hurdles the government must overcome before they can Brexit-proof their industry. Shares in Royal Bank of Scotland were down 7.3 percent, their biggest one-day fall since the June 2016 referendum. Barclays and Lloyds Banking Group dropped 6 percent each.

CURRENCY MARKET

Sterling fell to a session low versus the euro on the report that Rees-Mogg will submit a letter of no confidence in May. The pound sank to 88.52 pence to the euro, down 1.5 percent, and is set for its second biggest drop this year. "We are experiencing huge sell orders and the sterling-dollar pair is in free fall for now", Think Market analyst Naeem Aslam said. [L8N1XQ45J] The dollar jumped and traders bought into the safe-haven yen.

DEBT MARKET

Nerves among Britain government bond investors forced the country's debt agency to accept low-ball bids for a 20-year bond at auction to an extent not seen since March 2009. Data from Refinitiv showed the spread between 10-year and 30-year gilt yields had ballooned by more than 11 basis points.

STOCK MARKET

European shares reversed early gains, falling into negative territory in a broadbased rout, with autos and banking stocks leading the fallers. Investors also continued to fret about Rome's standoff with Brussels and Washington's row over trade with Beijing. Thee pan-European STOXX 600 index was down 0.5 percent, with German, Spanish and French bourses firmly in negative territory. Britain's FTSE 100 was flat.

PRIME MINISTER MAY COMMENTS

"We have been preparing for no-deal and we continue to prepare for no-deal because I recognise that we have a further stage of negotiation with the European Council and then that deal when finalised ... has to come back to this House," she told the House of Commons.

"The choice is clear: We can choose to leave with no deal, we can risk no Brexit at all, or we can choose to unite and support the best deal that can be negotiated."

EU COMMENTS

German Chancellor Angela Merkel

"We have a document on the table that Britain and the EU 27 have agreed to, so for me there is no question at the moment whether we negotiate further ... You have to see the alternatives and then ask: is what we have a basis?"

French Prime Minister Edouard Philippe

"We need to prepare ourselves for the possibility of a 'no-deal' Brexit," Philippe said. "It will escape no one that the current political situation in Britain could fuel uncertainty... over the ratification of the accord."

BUSINESS COMMENT

Aston Martin's boss said the Brexit deal is "good enough" but the company will not halt contingency plans.

Airbus welcomed the draft agreement but Chief Executive Tom Enders said: "We look forward to further clarity and the removal of uncertainty as soon as possible so that Airbus, like every business in the UK, can properly plan for the future."

"The outline agreement is a positive step in avoiding the devastating consequences of ‘no-deal’ and securing a transition period," said the Chief Executive of the Society of Motor Manufacturers and Traders Mike Hawes. "It is, however, only a first step and business seeks certainty and ambition when it comes to securing a competitive future."

RESIGNATION COMMENTS

Dominic Raab

"I cannot reconcile the terms of the proposed deal with the promises we made to the country in our manifesto at the last election ... This is, at its heart, a matter of public trust."

"No democratic nation has ever signed up to be bound by such an extensive regime, imposed externally without any democratic control over the laws to be applied, nor the ability to decide to exit the arrangement."

"That arrangement is now also taken as the starting point for negotiating the Future Economic Partnership. If we accept that, it will severely prejudice the second phase of negotiations against the UK."

OPPOSITION COMMENTS

Jeremy Corbyn, the leader of opposition Labour Party

"The withdrawal agreement and the outline political declaration represent a huge and damaging failure ... The government ... is in chaos."

(Compiled by David Stamp)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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Updated Date: Nov 16, 2018 00:07:40 IST

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